Bitcoin Forum

Signs that the global economy may be stagnating continue to appear. The two-year US Treasury yield is 2.462 percent with strong job growth for March over the 10-year (2.37 percent) and 30-year yield (2.435 percent), which indicates Monetary policy is too tight.


This reversal comes after the worst first quarter for Treasuries, which means that central banks are tightening monetary policy to curb the rise in inflation.


IMage source ---> https://newsprepare.com/2022/04/01/us-yield-curve-re-inverts-following-strong-jobs-report/

Its hard to believe the FED is overly hawkish in their policy, almost always they lag behind inflation and have been constantly easing via monetary policy for far too many years.   The economy can stall but also I dont think treasuries are the best reflection of that economy just the speculation and largest money traded within it perhaps.
   I understand the FED fears deflation far more then inflation, they will always have this bias towards diluting the monetary base because its their main control.   The main brake on economies right now will be supply shortages, oil is constrained by war and demand is high, many other commodities are also weakly supplied also; this matters as it will raise prices vs demand.   The FED can only do so much, I dont think fiscal budgets are in any way tight either.

This indicator predicted almost all the recessions in the past. When it inverts it usually means a recession follows in the next 6-18 months or so. However with how fast everything is going it might even be closer to 3 months or so.

Another indicator that leads to futures of recessions are the oil spikes. In the past whenever oil spiked it lead to a recession.

Then there is of course war, which generally leads to recessions.

So I wouldn’t be surprised if the indicator wasn’t wrong this time around. Inflation numbers are going to be crazy high next month most likely.

American treasury bonds were always considered as a super reliable no risk investment (this is why the rate is so low) till the previous year. But with around 2% yield this year you still can't save your money from the inflation. If inflation remains high then it would be harder to cover it with low risk investments ("safe" stocks would give you up to 15% APY). So unless stock market collapses we can hope that crypto would go up.
We might get a situation when investors would have a choise between crypto and garbage like penny stocks in order to save the money from the inflation.